http://www.foxbusiness.com/markets/2011/04/20/government-cash-handouts-exceed-tax-revenues/

Check this out...further proof how and why we ended up here.

I was shocked by the White House reaction. They are trying to sell this as a 'political' problem rather than an economic one. Worse, and of further proof that they just don't get it, they tried to 'persuade" S&P not to issue it. I findthat more scary and concerning than the warning itself. With two years left to 'get our fiscal house in order', they don't even see/understand the problem.

HitsRus;746180 wrote:I was shocked by the White House reaction. They are trying to sell this as a 'political' problem rather than an economic one. Worse, and of further proof that they just don't get it, they tried to 'persuade" S&P not to issue it. I findthat more scary and concerning than the warning itself. With two years left to 'get our fiscal house in order', they don't even see/understand the problem.

Oh I think the BHO Administration is fully aware of the ramifications and is in full damage control mode.

Yeah?...then that's even more scary. If they are 'aware' of the ramifications.... and they are more concerned about about damage control than fixing the problems, then their competence to govern effectively is even more suspect. All the more reason for S&P to issue the warning.

HitsRus;746280 wrote:Yeah?...then that's even more scary. If they are 'aware' of the ramifications.... and they are more concerned about about damage control than fixing the problems, then their competence to govern effectively is even more suspect. All the more reason for S&P to issue the warning.

EXACTLY!

The other way of looking at this is they plan to try to inflate their way out. Bill Gross has been saying this for years, and quietly you're hearing more rumblings of it. Let inflation creep up to 6% and you halve the present value of the debt in 12 years. With inflation being fairly tough to get going with all the global deflationary pressures, a downgrade in credit is another way to do it. May not be the end of the world, either, as it would force more fiscal responsibility on Washington and help on seniors on fixed incomes (since money markets and cd's don't pay shit these days). Not saying it isn't a very risky game to play, but I would guess more than a few in Washington would rather try to inflate their way out instead of cutting entitlements and losing votes. And that's what it boils down to - no one wants to make the tough decisions because they don't want to get voted out. Shouldn't be the case, unfortunately the average voter is ignorant and/or short-sighted.

gut;746815 wrote:The other way of looking at this is they plan to try to inflate their way out. Bill Gross has been saying this for years, and quietly you're hearing more rumblings of it. Let inflation creep up to 6% and you halve the present value of the debt in 12 years. With inflation being fairly tough to get going with all the global deflationary pressures, a downgrade in credit is another way to do it. May not be the end of the world, either, as it would force more fiscal responsibility on Washington and help on seniors on fixed incomes (since money markets and cd's don't pay shit these days). Not saying it isn't a very risky game to play, but I would guess more than a few in Washington would rather try to inflate their way out instead of cutting entitlements and losing votes. And that's what it boils down to - no one wants to make the tough decisions because they don't want to get voted out. Shouldn't be the case, unfortunately the average voter is ignorant and/or short-sighted.

It will likely be the way it is with one caveat, the global deflationary pressure has hit a snag with Chinese wages and will likely uptick. Result likely being an inflationary period with DC telling us to deal as it could be worse.

gut;746815 wrote:The other way of looking at this is they plan to try to inflate their way out. Bill Gross has been saying this for years, and quietly you're hearing more rumblings of it. Let inflation creep up to 6% and you halve the present value of the debt in 12 years. With inflation being fairly tough to get going with all the global deflationary pressures, a downgrade in credit is another way to do it. May not be the end of the world, either, as it would force more fiscal responsibility on Washington and help on seniors on fixed incomes (since money markets and cd's don't pay shit these days). Not saying it isn't a very risky game to play, but I would guess more than a few in Washington would rather try to inflate their way out instead of cutting entitlements and losing votes. And that's what it boils down to - no one wants to make the tough decisions because they don't want to get voted out. Shouldn't be the case, unfortunately the average voter is ignorant and/or short-sighted.

I agree 100% with your analysis of this being a high stakes game of chicken. Will Bernacke pursue QE3, or allow upward pressure on rates and strengthening of the dollar? http://www.cnbc.com/id/42583149/Further_Economic_Weakness_Means_QE3_Economist Who knows...nobody knows what's going to happen. Scary, eh?

The trick will be...how to keep inflation "manageable", like around 5-7%, and not let it spiral out of control into hyperinflation, ala the Carter legacy. Personally, the dollar ain't what it used to be and I have no idea how they can control inflation at a manageable level. If it backfires, 8.9% unemployment will be the heyday of the 21st century.

Manhattan Buckeye;746821 wrote:It will likely be the way it is with one caveat, the global deflationary pressure has hit a snag with Chinese wages and will likely uptick. Result likely being an inflationary period with DC telling us to deal as it could be worse.

True, but China alone is not enough to derail global deflationary pressures - you have that throughout Asia and Eastern Europe, and to lesser extent Mexico and South America. We've had 0% interest rates for several years and have gone thru 2 rounds of QE, and yet inflation is still struggling to breach 2% (let's not debate the merits of CPI).

BGFalcons82;746862 wrote:...The trick will be...how to keep inflation "manageable", like around 5-7%, and not let it spiral out of control into hyperinflation, ala the Carter legacy. Personally, the dollar ain't what it used to be and I have no idea how they can control inflation at a manageable level. If it backfires, 8.9% unemployment will be the heyday of the 21st century.

I must admit that I was just a "youngster" during the Carter Administration, but I do remember some things and have studied and heard anecdotes from relatives about that time. This current period/administration is very similar to that one as I see it. Stagflation anyone?

obama was addressing a group the other day and his exact words were: "we cannot spend more than we take in ...." I darn near wrecked the car when I heard that.

Here is the ALL-TIME BIGGEST DEFICIT SPENDER AND DEBT CREATOR IN THE HISTORY OF THE WORLD actually expecting THE PEOPLE to believe his (new) lies. That points once again straight to his massive arrogance. What a complete sham this man is.

Change we can believe in ...........

Con_Alma;744813 wrote:"When the people find that they can vote themselves money, that will herald the end of the Republic."

Benjamin Franklin

Sadly many in this country will witness firsthand the truth of this statement.